The price of a barrel of US oil which was averaging $104 nearly 12 months back, is around $44 per barrel – a major change by anyone’s reckoning. The effects of this price slump on the tank industry have been significant.
Oil traders are seeking out storage in order to sell at a profit in the future when the price rebounds, according to experts.
The traders are buying up storage at such a rate that the International Energy Agency anticipates with stock levels already at an 80-year high, the limits of some regions’ tank capacity are now being severely tested.
Tank industry players are set to assemble at the Tank World Expo, on April 13 and 14 in Dubai, UAE, to discuss opportunities and challenges facing the sector.
So, while the low price of oil provides challenges for sections of the energy industry, for storage it presents a major opportunity, the experts said.
Hendrik Schaake, business development manager at Endress+Hauser, an associate sponsor of the event, said: “2015 started with mixed feelings about the reaction of oil companies with regard to oil price development. To some extent, we do of course face the effects of these developments with some new projects being postponed or cancelled.
“However, many projects are still on-going since the price drop is not a result of a decrease in demand. Furthermore, we see a strong increase in interest for optimisation solutions for existing installations to streamline product and business information flows; reduce losses and assure safety.”
Edwin Lammers, executive commercial manager of the Sohar Port and Freezone and one of Tank World’s lead speakers, on being asked about the role of super-tanker storage, said: “In terms of storing oil on the high-seas, there are an equal number of benefits as there are risks. For example, towards the end of last year, the spot price for oil was lower than in the futures market.
“This is one of the reasons why crude oil is being stored at sea as companies currently see a greater benefit in buying up physical oil stocks and immediately selling futures. The challenge, of course, is that if interest rates or storage costs increase, the cost of storing oil out at sea would eclipse any future profits.”
Top speakers at the event will discuss this issue and many others representing facilities, terminals and ports in the UAE, Oman, Egypt, Jordan, Turkey, the Netherlands, Nigeria, India plus exhibitors based in 15 different countries across three continents.
Meanwhile, the organisers have pointed out that the expo is close to being a complete sell-out, popular with both established businesses in the industry and those looking to move into it.
With exclusive rights in Dubai, Tank World 2015 will provide a platform for over 80 speakers and more than 100 technology and solutions providers exhibiting.
Source: Trade Arabia